Delaware is a small state located on the East Coast of the United States of America. For numerous decades, companies ranging from startups to multinational giants, have chosen Delaware as their home state for incorporation due to some state policies that are only functional in Delaware. This leads to the important question, why do so many giant companies choose to incorporate in Delaware and are there any benefits to this?
One of the most important and enticing factors is that Delaware has numerous tax advantages, especially for businesses. The fact that there is an absence of sales tax and value-added tax greatly reduces the tax burden on companies, which considerably creates an advantage for both the consumer and the firm.
Furthermore, the state of Delaware doesn’t impose any corporate income tax onto companies that do not operate within the state, in other words, firms that work internationally or outside this state. In the long run, this could greatly increase revenue, savings and investment in a company.
Another interesting fact about Delaware is in its privacy and confidentiality offers for companies being incorporated in this state. Delaware corporations do not need to disclose officer or director names on the formation documents. This gives people an additional layer of privacy, especially for people who want to maintain privacy for high-profile individuals or companies that are involved in sensitive industries.
Additionally, Delaware is advantageous location wise, its close proximity to major legal and financial centers such as New York City and Washington DC allows businesses who are seeking legal action and/or financial services to quickly get their needs met. In the state of Delaware its court system is well established and highly respected due to the fact that Delaware’s Court of Chancery specializes in corporate issues and uses judges instead of juries. This means that if your company is involved in litigation, you’ll get a judge with a lot of expertise in complex corporate law matters. The Delaware Court of Chancery is known as being quick and efficient and has earned a great reputation for its many years of successful work.
Delaware also offers a lot of flexibility when establishing and structuring your corporation.
One of Delaware’s features that attracts people is its corporation law known as the DGCL. It is known as one of the most flexible and pro-business statues in the United States. It allows flexibility in terms of how you can structure your corporation and board members. Shareholders and directors do not have to be a resident or residing in Delaware, they could be living outside the country or in a different state. Delaware also allows just one person to be the director, shareholder and officer of the corporation whilst in other states you may need a minimum of three people to be held in the position of the officer and director positions. This allows companies to have their corporate structures that would meet their specific needs and eventual goals.
In conclusion, Delaware allows a multitude of opportunities that would not be available in other states in the USA. Its numerous tax advantages and tax laws bring opportunities for people whilst also protecting a person’s privacy.